Vol 13 (2016) - Issue 2

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Recent Reform of Greek Restructuring and Insolvency Law

Historical background
Greece has lately reformed its national restructuring and insolvency law to improve the existing statutory legal framework and enhance its effectiveness in domestic cases. These reforms may have been partly fuelled by regulatory competition in times of crisis but were mainly triggered by the commitment of the Greek State to reforms towards the European authorities in the context of a Memorandum of Understanding negotiated and agreed between the European Commission (on behalf of the European Stability Mechanism – ESM) and the Greek State. Against this background, Greece introduced Law 4336/2015 regarding the ratification of the Financial Assistance Facility Agreement with the ESM, which includes, among others, amendments to the national restructuring and insolvency law. These amendments are to a large extent in line with the 'Restructuring Recommendation' of the European Commission issued in 2014 ('RR') pushing towards harmonisation with respect to Member States’ restructuring regimes. The most remarkable amendments thereof are the following:

Remarkable amendments
Providing for the survival of ongoing contracts in bankruptcy
Pursuant to Article 31 par. 1 and 2 of the Greek Bankruptcy Code (hereinafter 'GBC'), as amended, the initiation of a bankruptcy proceeding may no longer be seen as a reason to terminate an ongoing contract by virtue of an ipso facto contractual clause. A special treatment is introduced for ongoing financial contracts contemplating the provision of banking, security and investment services, which are excluded from the above rule, and therefore can be automatically terminated or amended due to the bankruptcy of a debtor, to the extent this has been agreed upon and provided by virtue of a relevant clause in force prior to the declaration of its bankruptcy. To be noted that this amendment is in line with best international practice and aims at preserving the value of the business, also by leaving an area of discretion as to the continued validity of contracts, regardless of the initiation of bankruptcy proceedings.

Accelerating bankruptcy proceedings
Articles 93 et seq. GBC, as amended, provide for the shortening of the regular bankruptcy proceedings making them more efficient by setting stricter timeframes for completion of various stages thereof. In particular, creditors have only one month from the declaration of bankruptcy (reduced from three months previously) to announce their claims, while the bankruptcy administrator ('syndic') must verify them as a general rule within a month (reduced from three months previously) with the option to extend the timeframe up to three months. On the other hand, a new deadline of ten days from the judicial verification of the claims is set for the filing of objections before the bankruptcy court, which has to conduct the hearing within twenty days from the above filing.